As the Federal Reserve holds interest rates steady for the third consecutive meeting, global markets are zeroing in on two key forces: persistent uncertainty around elevated tariffs and strong earnings from major tech firms.

According to Xinhua News Agency, Powell noted that all of the Trump administration's new policies are still evolving, and their effects on the economy remain "highly uncertain." Notably, U.S. President Donald Trump on May 8 announced at the White House that the United States and Britain had reached a new trade agreement, which includes partially rolling back tariffs in certain sectors and further expanding market access for each other's products.

Despite rising macroeconomic volatility, the U.S. stock market is showing signs of structural resilience. Excluding Nvidia, the remaining six members of the “Magnificent Seven” tech giants reported first-quarter earnings that beat consensus estimates by an average of 16%—far above the 4% average among S&P 500 constituents. Google and Microsoft reiterated their AI investment plans, Meta raised its full-year capex guidance, and Amazon’s AI-driven business revenue posted triple-digit growth. Amid geopolitical tensions and cautious forward guidance, these tech giants continue to serve as both growth engines and defensive anchors, supported by strong cash flows and long-term strategic positioning.

In an exclusive interview with Southern Finance, Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said signs of a “mild recession” are emerging in the U.S. economy, and the Fed may remain on hold through September. He emphasized that what the market faces today is not just data divergence, but a fundamental shift in policy logic and capital flow patterns. Against this backdrop, the U.S. dollar index is stabilizing near 100, while gold prices are trending higher amid a mix of safe-haven demand and yield recalibration—reflecting continued uncertainty over the medium term. According to Cardillo, striking the right balance between tariffs, interest rates, and economic expectations will be the dominant theme in global asset pricing in the months ahead.

Southern Finance: The Federal Reserve has just held interest rates steady for the third consecutive time. Chair Jerome Powell made it clear he won’t be rushed into cutting rates until there’s more clarity on trade policy. What message do you think this “wait-and-see” stance sends to the market?

Peter Cardillo: I think he’s being consistent—that’s been his position all along. And I believe he’s right. We need more clarity around trade and how these policies will unfold. The big question, of course, is whether inflation will resurface and become a problem. So I think he’s taking the right approach by remaining cautious and watching how things evolve.

Southern Finance: The Fed’s latest statement also emphasized that both inflation and employment risks have increased.

Peter Cardillo: Yes, and notably, Powell even brought up the word “stagflation”—a topic that hasn’t been mentioned in years. That’s significant. While inflation has been trending lower, it remains sticky. Prices have come down, yes, but not to a level that would really boost consumer disposable income. So vigilance is essential. I think the bond market is recognizing that and reacting positively to Powell’s steady hand.

Southern Finance: Are you seeing early signs of stagflation?

Peter Cardillo: There are some early indicators. I’d call them sporadic for now, but yes, signs are emerging. For example, while crude oil and gasoline prices have come down, they haven’t declined significantly at the pump. The average is still over three dollars a gallon. That’s an improvement from four and a half, of course, but we’ve been holding steady at around three for eight to nine months now. That’s not exactly a relief to most consumers.

Southern Finance: The UK and the U.S. have reached a trade tariff agreement. How do you see this news impacting the market?

Peter Cardillo: It’s good news. Once it’s officially announced, it would mark the first trade agreement the U.S. has reached since the new tariff regime began. Of course, this is just the beginning—there’s a long road ahead. But I think markets will welcome it. It’s a sign of some progress in trade diplomacy. The U.K. is a major partner, and this could pave the way for talks with other key countries—China, Canada, India, and Japan. I expect India and perhaps Japan to be the next major players in this space.

Southern Finance: How many rate cuts do you anticipate in 2025? Has your view changed since the beginning of the year?

Peter Cardillo: The market is currently pricing in three or four cuts. Personally, I expect just one or two. I don’t see the Fed cutting rates in the June meeting unless we see a dramatic change in economic conditions over the next few weeks.

Southern Finance: So, a rate cut would more likely come in the second half of the year?

Peter Cardillo: Yes, I think September is more realistic.

Southern Finance: At the same time, President Trump has been publicly pressuring Powell to lower rates. Do you think Powell will continue to hold this “wait-and-see” stance?

Peter Cardillo: I think that’s just political rhetoric. I don’t believe it will influence Powell. In fact, I think it does more harm than good. The Federal Reserve is an independent institution. They’ll take their time. If anything, such pressure might make them even more cautious—unless there’s a compelling economic reason to act swiftly.

Southern Finance: But right now, the data doesn’t strongly support a rate cut, correct?

Peter Cardillo: That’s right. The data is inconsistent. We have good news, bad news, and a lack of a clear direction for the economy. That said, I believe there’s a real possibility we’re already in a mild recession.

Southern Finance: A mild recession? Could you elaborate?

Peter Cardillo: It’s largely due to uncertainty. We’ve seen it reflected in manufacturing and services PMIs, both of which are trending lower. No one is stepping up with new capital expenditures—that’s a red flag. We had negative growth in the first quarter, and I suspect we’ll see the same in Q2.

Southern Finance: Do you think this light recession could develop into something more serious?

Peter Cardillo: No, I don’t. I don’t think it will be deep or long-lasting. I believe we’ll recover quickly.

Southern Finance: What would help the U.S. economy emerge from this mild recession?

Peter Cardillo: Reduced trade uncertainty and a policy move by the Fed. That said, I think it’s already too late for the Fed to prevent a recession—they can only help ease the way out of it.

Southern Finance: Aside from the Fed’s monetary policy and tariffs, are there other trends investors should keep an eye on?

Peter Cardillo: Yes—investors should be watching yields, the dollar, and also gold. These are key asset classes right now.

Southern Finance: Gold prices have been volatile this year. Do you see this as a short-term bounce or the beginning of a longer-term uptrend?

Peter Cardillo: I think yields will remain stable within a 15-basis-point range, and gold still has room to rise. As for the dollar, I think we’re seeing some stabilization for now.

Southern Finance: Yes, the dollar index has been trending lower recently.

Peter Cardillo: It has, but it’s firming up around parity—around the 100 level. That’s likely where we’ll see it trade in the coming months.

Southern Finance: Even though market attention is shifting away from earnings, we’re still in the middle of earnings season, right?

Peter Cardillo: Actually, we’re at the peak of earnings season. Most companies have beaten market expectations so far. The one missing element is forward guidance—that’s still cloudy due to ongoing uncertainty. We’ll need to see how second-quarter earnings develop.